Goldman Sachs has adjusted its price target for Wabtec (WAB, Financial), elevating it from $175 to $201, while maintaining a Neutral rating on the stock. This decision comes in light of Wabtec's robust performance in the first quarter, where it surpassed earnings and margin expectations.
One of the driving factors behind this optimistic outlook is the temporary relief from Liberation Day tariffs, which will not be imposed until after May 26th. This exemption allows Wabtec's supply chain team to strategically enhance its sourcing capabilities throughout the year, potentially boosting operational efficiency.
These developments point to a positive trajectory for Wabtec, as it navigates the complexities of international tariffs and continues to deliver strong financial results.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 9 analysts, the average target price for Westinghouse Air Brake Technologies Corp (WAB, Financial) is $209.36 with a high estimate of $240.00 and a low estimate of $175.00. The average target implies an upside of 15.05% from the current price of $181.97. More detailed estimate data can be found on the Westinghouse Air Brake Technologies Corp (WAB) Forecast page.
Based on the consensus recommendation from 13 brokerage firms, Westinghouse Air Brake Technologies Corp's (WAB, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Westinghouse Air Brake Technologies Corp (WAB, Financial) in one year is $149.69, suggesting a downside of 17.74% from the current price of $181.97. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Westinghouse Air Brake Technologies Corp (WAB) Summary page.
WAB Key Business Developments
Release Date: February 12, 2025
- Revenue: $2.6 billion for Q4, up over 2% year-over-year.
- Adjusted EPS: Increased by 9% from the previous year.
- Cash Flow from Operations: $722 million for Q4, with a cash conversion of 212%.
- 12-Month Backlog: $7.7 billion, indicating strong momentum.
- Operating Margin Expansion: 190 basis points for the year.
- Adjusted Operating Margin for Q4: 16.9%, largely flat year-over-year.
- Freight Segment Operating Margin: 15.2%, up 1.6 percentage points from last year.
- Transit Segment Sales: $789 million, up 7.1% year-over-year.
- GAAP Gross Margin: 30.9% for Q4, up 0.6 percentage points from last year.
- Dividend Increase: 25% increase approved by the Board of Directors.
- Share Repurchase Authorization: Increased by $1 billion.
- 2025 Sales Guidance: $10.7 billion to $11 billion, up 5% at the midpoint.
- 2025 Adjusted EPS Guidance: $8.35 to $8.75, up 13% at the midpoint.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Westinghouse Air Brake Technologies Corp (WAB, Financial) reported a strong fourth quarter with sales of $2.6 billion, up over 2%, and adjusted EPS up 9% from the previous year.
- The company achieved a cash conversion rate of 117% for the year and 212% for the fourth quarter, indicating strong cash flow management.
- WAB's 12-month backlog reached $7.7 billion, providing visibility and momentum for future growth.
- The company announced a 25% increase in its dividend and authorized an additional $1 billion for share repurchases, reflecting confidence in future performance.
- WAB's international markets, particularly in regions like Africa, Latin America, and Asia, showed strong growth, with significant orders for locomotives and modernization projects.
Negative Points
- North American railcar builds demand decreased in 2024 and is expected to decline by nearly 17% in 2025, posing a challenge for the domestic market.
- The freight segment sales were largely flat during the quarter, impacted by a shift in locomotive and mod production.
- Digital Intelligence sales were down 1.4% from the previous year, driven by softness in North America.
- The company incurred net pretax charges of $32 million for restructuring related to Integration 2.0 and portfolio optimization initiatives.
- Despite strong international growth, the North American market remains mixed, with flat locomotive fleet activity compared to the previous year.
